Farm Insurance Claims Stall as Non-Life Insurers Await Government Subsidies

KATHMANDU: Non-life insurance companies in Nepal have halted the settlement of claims against insured farm products, citing a delay in receiving premium subsidies from the government. Chunky Chhetry, President of the Nepal Insurers’ Association, expressed concerns over the financial strain faced by insurers due to the outstanding payments.

Chhetry emphasized that the insurers’ inability to secure premium subsidies has led to a halt in claim settlements for farm insurance. The delay in receiving subsidies has significantly escalated the financial liabilities of non-life insurers, compelling them to exercise caution in assuming further risks.

In response to the government’s delay in releasing subsidy amounts, non-life insurers have ceased issuing farm insurance policies. This move is intended to exert pressure on the government to expedite the settlement of outstanding dues, which have accumulated over the past one and a half months.

Raju Raman Paudel, Executive Director of the Nepal Insurance Authority (NIA), criticized the insurers’ decision, labeling it as inappropriate. Paudel revealed that the regulator has been actively lobbying the government to disburse the outstanding dues owed to insurers.

The farm insurance scheme, introduced by the government with much fanfare in January 2013, aimed to provide coverage for various agricultural products and livestock. Under this scheme, insurance companies were authorized to offer policies covering crops, vegetables, cereals, fruits, poultry, fishery, cattle, and other farm animals.

In an effort to promote the scheme’s effectiveness, the government initially announced a 50 percent subsidy on insurance premiums, later increasing it to 80 percent. However, despite the subsidy promises, insurers are grappling with delayed payments from the government, hampering their ability to fulfill their obligations to policyholders.

Chhetry disclosed that while the government disbursed Rs 560 million to insurers three weeks ago, approximately Rs 2 billion in subsidies remain outstanding. The association urges the government to expedite the release of funds to ensure the smooth operation of the farm insurance scheme and alleviate the financial burden on insurers.

The impasse between non-life insurers and the government underscores the need for timely subsidy disbursements to sustain vital insurance programs and support the agricultural sector. As stakeholders await resolution, the fate of farm insurance claim settlements hangs in the balance, leaving farmers vulnerable to uncertainties in the absence of financial protection.

Fiscal Nepal |
Thursday April 25, 2024, 10:25:36 AM |

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